The distortion of relative prices must be allowed

The structure demand chang es over time (for example today due to growing demand for electronics); the energy transition will also give rise to a major change in the structure of production (disappearance of fossil fuel production, ICE cars, etc.). For production to decline in one business sector and increase in another, for capital and employment to move from one sector to another, the relative price of goods and services produced in expanding sectors must increase relative to that of goods and services produced in shrinking sectors. The economy must therefore allow the distortion of relative prices. However, this is very difficult if overall inflation is very low and prices can hardly fall. Fairly high overall inflation is therefore required, which effectively argues for the rejection of a situation where inflation remains very low on a permanent basis. It remains to be seen whether an expansionary monetary policy will actually raise inflation: excessively-low inflation must be avoided, but is monetary policy the right instrument?